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EXHIBIT 10.19
DESKTALK SYSTEMS, INC.
2000 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
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to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees appointed
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to administer the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
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administration of stock incentive plans, if any, under applicable provisions of
federal and state securities laws, the corporate laws of California and, to the
extent other than California, the corporate law of the state of the Company's
incorporation, the Code, the rules of any applicable stock exchange or national
market system, and the rules of any foreign jurisdiction applicable to Awards
granted to residents therein.
(c) "Award Agreement" means the written agreement evidencing the
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grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(d) "Board" means the Board of Directors of the Company.
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(e) "Code" means the Internal Revenue Code of 1986, as amended.
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(f) "Committee" means any committee appointed by the Board to
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administer the Plan.
(g) "Common Stock" means the common stock of the Company.
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(h) "Company" means DeskTalk Systems, Inc., a California corporation.
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(i) "Consultant" means any person (other than an Employee or a
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Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(j) "Continuous Service" means that the provision of services to the
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Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not interrupted or terminated. Continuous Service shall not be considered
interrupted in the case of (i) any approved leave of absence, (ii) transfers
among the Company, any Related Entity, or any successor, in any capacity of
Employee, Director or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or a Related Entity in any
capacity of Employee, Director or Consultant (except as otherwise provided in
the Award Agreement). An approved leave of absence shall include sick leave,
military leave, or any other authorized personal leave. For purposes of each
Incentive Stock Option granted under the Plan, if such
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leave exceeds ninety (90) days, and reemployment upon expiration of such leave
is not guaranteed by statute or contract, then the Incentive Stock Option shall
be treated as a Non-Qualified Stock Option on the day three (3) months and one
(1) day following the expiration of such ninety (90) day period.
(k) "Corporate Transaction" means any of the following transactions
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to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations);
(iii) approval by the Company's shareholders of any plan or
proposal for the complete liquidation or dissolution of the Company;
(iv) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger; or
(v) acquisition by any person or related group of persons
(other than the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Company's outstanding securities, but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.
(l) "Director" means a member of the Board or the board of directors
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of any Related Entity.
(m) "Disability" means a Grantee would qualify for benefit payments
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under the long-term disability policy of the Company or the Related Entity to
which the Grantee provides services regardless of whether the Grantee is covered
by such policy. If the Company or the Related Entity to which the Grantee
provides service does not have a long-term disability plan in place,
"Disability" means that a Grantee is permanently unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment. A Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.
(n) "Employee" means any person, including an Officer or Director,
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who is an employee of the Company or any Related Entity. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.
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(o) "Exchange Act" means the Securities Exchange Act of 1934, as
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amended.
(p) "Fair Market Value" means, as of any date, the value of Common
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Stock determined as follows:
(i) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a Share for the last market
trading day prior to the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a closing price was
reported) on the stock exchange determined by the Administrator to be the
primary market for the Common Stock or the Nasdaq National Market, whichever is
applicable or (B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked prices of a
Share on the Nasdaq Small Cap Market for the day prior to the time of the
determination (or, if no such prices were reported on that date, on the last
date on which such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or
(ii) In the absence of an established market for the Common Stock
of the type described in (i), above, the Fair Market Value thereof shall be
determined by the Administrator in good faith and in a manner consistent with
Section 260.140.50 of Title 10 of the California Code of Regulations.
(q) "Grantee" means an Employee, Director or Consultant who receives
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an Award under the Plan.
(r) "Incentive Stock Option" means an Option intended to qualify as an
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incentive stock option within the meaning of Section 422 of the Code.
(s) "Non-Qualified Stock Option" means an Option not intended to
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qualify as an Incentive Stock Option.
(t) "Officer" means a person who is an officer of the Company or a
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Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(u) "Option" means an option to purchase Shares pursuant to an Award
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Agreement granted under the Plan.
(v) "Parent" means a "parent corporation," whether now or hereafter
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existing, as defined in Section 424(e) of the Code.
(w) "Plan" means this 2000 Stock Incentive Plan.
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(x) "Post-Termination Exercise Period" means the period specified in
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the Award Agreement of not less than thirty (30) days commencing on the date of
termination of the Grantee's Continuous Service, or such longer period as may be
applicable upon death or Disability.
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(y) "Registration Date" means the first to occur of (i) the closing
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of the first sale to the general public of (A) the Common Stock or (B) the same
class of securities of a successor corporation (or its Parent) issued pursuant
to a Corporate Transaction in exchange for or in substitution of the Common
Stock, pursuant to a registration statement filed with and declared effective by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.
(z) "Related Entity" means any Parent, Subsidiary and any business,
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corporation, partnership, limited liability company or other entity in which the
Company, a Parent or a Subsidiary holds a substantial ownership interest,
directly or indirectly.
(aa) "Restricted Stock" means Shares issued under the Plan to the
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Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.
(bb) "Share" means a share of the Common Stock.
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(cc) "Subsidiary" means a "subsidiary corporation," whether now or
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hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
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(a) Subject to the provisions of Section 11(a) below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 800,000 Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is
forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. Shares that actually have been issued
under the Plan pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested
Shares are forfeited, or repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under the Plan.
4. Administration of the Plan.
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(a) Plan Administrator. With respect to grants of Awards to
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Employees, Directors, or Consultants, the Plan shall be administered by (A) the
Board or (B) a Committee (or a subcommittee of the Committee) designated by the
Board, which Committee shall be constituted in such a manner as to satisfy
Applicable Laws. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
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(b) Powers of the Administrator. Subject to Applicable Laws and
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the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom
Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are granted
hereunder;
(iii) to determine the number of Shares or the amount of other
consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the
Plan;
(v) to determine the terms and conditions of any Award granted
hereunder;
(vi) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such rules or laws; provided,
however, that no Award shall be granted under any such additional terms,
conditions, rules or procedures with terms or conditions which are inconsistent
with the provisions of the Plan;
(vii) to amend the terms of any outstanding Award granted under
the Plan, provided that any amendment that would adversely affect the Grantee's
rights under an outstanding Award shall not be made without the Grantee's
written consent;
(viii) to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the terms
of the Plan, as the Administrator deems appropriate.
5. Eligibility. Awards other than Incentive Stock Options may be
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granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
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(a) Type of Awards. The Administrator is authorized under the Plan to
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award any type of arrangement to an Employee, Director or Consultant that is not
inconsistent with the provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, or similar right with
a fixed or variable price related to the Fair Market Value of
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the Shares and with an exercise or conversion privilege related to the passage
of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or (iii) any other security with the
value derived from the value of the Shares. Such awards include, without
limitation, Options, and an Award may consist of one such security or benefit,
or two (2) or more of them in any combination or alternative.
(b) Designation of Award. Each Award shall be designated in the Award
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Agreement. In the case of an Option, the Option shall be designated as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of Shares
subject to Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess
Options, to the extent of the Shares covered thereby in excess of the foregoing
limitation, shall be treated as Non-Qualified Stock Options. For this purpose,
Incentive Stock Options shall be taken into account in the order in which they
were granted, and the Fair Market Value of the Shares shall be determined as of
the grant date of the relevant Option.
(c) Conditions of Award. Subject to the terms of the Plan, the
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Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total shareholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may issue
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Awards under the Plan in settlement, assumption or substitution for, outstanding
awards or obligations to grant future awards in connection with the Company or a
Related Entity acquiring another entity, an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.
(e) Award Exchange Programs. The Administrator may establish one or
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more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.
(f) Separate Programs. The Administrator may establish one or more
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separate programs under the Plan for the purpose of issuing particular forms of
Awards to one or more classes of Grantees on such terms and conditions as
determined by the Administrator from time to time.
(g) Early Exercise. The Award Agreement may, but need not, include a
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provision whereby the Grantee may elect at any time while an Employee, Director
or Consultant to
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exercise any part or all of the Award prior to full vesting of the Award. Any
unvested Shares received pursuant to such exercise may be subject to a
repurchase right in favor of the Company or a Related Entity or to any other
restriction the Administrator determines to be appropriate.
(h) Term of Award. The term of each Award shall be the term stated in
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the Award Agreement, provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to a Grantee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Award Agreement.
(i) Transferability of Awards. Non-Qualified Stock Options shall be
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transferable (i) to the extent provided in the Award Agreement and in a manner
consistent with Section 260.140.41 of Title 10 of the California Code of
Regulations and (ii) by will, and by the laws of descent and distribution.
Incentive Stock Options and other Awards may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Grantee, only by the Grantee.
(j) Time of Granting Awards. The date of grant of an Award shall for
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all purposes be the date on which the Administrator makes the determination to
grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
7. Award Exercise or Purchase Price, Consideration and Taxes.
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(a) Exercise or Purchase Price. The exercise or purchase price, if
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any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be not less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant; or
(B) granted to any Employee other than an Employee described
in the preceding paragraph, the per Share exercise price shall be not less than
one hundred percent (100%) of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Non-Qualified Stock Option:
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be not
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less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or
(B) granted to any person other than a person described in
the preceding paragraph, the per Share exercise price shall be not less than
eighty-five percent (85%) of the Fair Market Value per Share on the date of
grant.
(iii) In the case of other Awards, such price as is determined by
the Administrator.
(iv) Notwithstanding the foregoing provisions of this Section
7(a), in the case of an Award issued pursuant to Section 6(d), above, the
exercise or purchase price for the Award shall be determined in accordance with
the principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Laws, the consideration to be
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paid for the Shares to be issued upon exercise or purchase of an Award including
the method of payment, shall be determined by the Administrator (and, in the
case of an Incentive Stock Option, shall be determined at the time of grant). In
addition to any other types of consideration the Administrator may determine,
the Administrator is authorized to accept as consideration for Shares issued
under the Plan the following:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such recourse,
interest, security, and redemption provisions as the Administrator determines as
appropriate;
(iv) if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting compensation charge with respect to the Shares used to
pay the exercise price unless otherwise determined by the Administrator);
(v) with respect to Options, if the exercise occurs on or after
the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
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(c) Taxes. No Shares shall be delivered under the Plan to any Grantee
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or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.
8. Exercise of Award.
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(a) Procedure for Exercise; Rights as a Shareholder.
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(i) Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement but in the case of an
Option, in no case at a rate of less than twenty percent (20%) per year over
five (5) years from the date the Option is granted, subject to reasonable
conditions such as continued employment. Notwithstanding the foregoing, in the
case of an Option granted to an Officer, Director or Consultant, the Award
Agreement may provide that the Option may become exercisable, subject to
reasonable conditions such as such Officer's, Director's or Consultant's
Continuous Service, at any time or during any period established in the Award
Agreement.
(ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 11(a), below.
(b) Exercise of Award Following Termination of Continuous Service. In
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the event of termination of a Grantee's Continuous Service for any reason other
than Disability or death (but not in the event of a Grantee's change of status
from Employee to Consultant or from Consultant to Employee), such Grantee may,
but only during the Post-Termination Exercise Period (but in no event later than
the expiration date of the term of such Award as set forth in the Award
Agreement), exercise the Award to the extent that the Grantee was entitled to
exercise it at the date of such termination or to such other extent as may be
determined by the Administrator. In the event of a Grantee's change of status
from Employee to Consultant, an Employee's Incentive Stock Option shall convert
automatically to a Non-Qualified Stock Option on the day three (3) months and
one day following such change of status. To the extent that the Grantee is not
entitled to exercise the Award at the date of termination, or if the Grantee
does not exercise such Award to the extent so entitled within the Post-
Termination Exercise Period, the Award shall terminate.
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(c) Disability of Grantee. In the event of termination of a Grantee's
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Continuous Service as a result of his or her Disability, Grantee may, but only
within six (6) months from the date of such termination (and in no event later
than the expiration date of the term of such Award as set forth in the Award
Agreement), exercise the Award to the extent that the Grantee was otherwise
entitled to exercise it at the date of such termination; provided, however, that
if such Disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code, in the case of an Incentive Stock Option such Incentive
Stock Option shall automatically convert to a Non-Qualified Stock Option on the
day three (3) months and one day following such termination. To the extent that
the Grantee is not entitled to exercise the Award at the date of termination, or
if Grantee does not exercise such Award to the extent so entitled within the
time specified herein, the Award shall terminate.
(d) Death of Grantee. In the event of a termination of the Grantee's
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Continuous Service as a result of his or her death, or in the event of the death
of the Grantee during the Post-Termination Exercise Period or during the six (6)
month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate or a person who acquired
the right to exercise the Award by bequest or inheritance may exercise the
Award, but only to the extent that the Grantee was entitled to exercise the
Award as of the date of termination, within six (6) months from the date of
death (but in no event later than the expiration of the term of such Award as
set forth in the Award Agreement). To the extent that, at the time of death, the
Grantee was not entitled to exercise the Award, or if the Grantee's estate or a
person who acquired the right to exercise the Award by bequest or inheritance
does not exercise such Award to the extent so entitled within the time specified
herein, the Award shall terminate.
9. Conditions Upon Issuance of Shares.
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(a) Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all Applicable Laws, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that: (1) the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws, and (2) that if requested at any time by the Company or any
representative of the underwriters in connection with any registration of the
offering of any securities of the Company under the Securities Act of 1933, as
amended (the "Securities Act"), the person exercising such award agrees not to
sell or otherwise dispose of, whether privately negotiated or open market
transactions, any Shares or other securities of the Company held by the person
during such period as the Company and the representatives of the underwriters
may request (not to exceed 180 days) following the effective date of any
registration statement of the Company filed under the Securities Act for an
underwritten public offering, and the person agrees that the Company may impose
stop-transfer instructions with respect to any securities of the Company subject
to the foregoing restrictions until the end of such market standoff period, and
the person shall enter into a 180 day(or such lesser period as the
representative of the
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underwriters may request) market standoff agreement with the representative of
the Company's underwriters for each underwritten public offering by the Company.
10. Repurchase Rights. If the provisions of an Award Agreement grant to the
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Company the right to repurchase Shares upon termination of the Grantee's
Continuous Service, the Award Agreement shall (or may, with respect to Awards
granted or issued to Officers, Directors or Consultants) provide that:
(a) the right to repurchase must be exercised, if at all, within
ninety (90) days of the termination of the Grantee's Continuous Service (or in
the case of Shares issued upon exercise of Awards after the date of termination
of the Grantee's Continuous Service, within ninety (90) days after the date of
the Award exercise);
(b) the consideration payable for the Shares upon exercise of such
repurchase right shall be made in cash or by cancellation of purchase money
indebtedness within the ninety (90) day periods specified in Section 10(a);
(c) the amount of such consideration shall (i) be equal to the
original purchase price paid by Grantee for each such Share; provided, that the
right to repurchase such Shares at the original purchase price shall lapse at
the rate of at least twenty percent (20%) of the Shares subject to the Award per
year over five (5) years from the date the Award is granted (without respect to
the date the Award was exercised or became exercisable), and (ii) with respect
to Shares, other than Shares subject to repurchase at the original purchase
price pursuant to clause (i) above, not less than the Fair Market Value of the
Shares to be repurchased on the date of termination of Grantee's Continuous
Service; and
(d) the right to repurchase Shares, other than the right to repurchase
Shares at the original purchase price pursuant to clause (i) of Section 10(c),
shall terminate on the Registration Date.
11. Adjustments Upon Changes in Capitalization or Corporate Transaction.
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(a) Adjustments upon Changes in Capitalization. Subject to any
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required action by the shareholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, as well as any other terms that the Administrator
determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar transaction affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock to which Section
424(a) of the Code applies or a similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
11 OF 13
<PAGE>
conclusive. Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.
(b) Corporate Transaction.
---------------------
(i) Termination of Award if Not Assumed. In the event of a
-----------------------------------
Corporate Transaction, each Award will terminate upon the consummation of the
Corporate Transaction, unless the Award is assumed by the successor corporation
or Parent thereof in connection with the Corporate Transaction.
(ii) Acceleration of Award Upon Corporate Transaction. Except as
------------------------------------------------
provided otherwise in an individual Award Agreement, in the event of any
Corporate Transaction there will not be any acceleration of vesting or
exercisability of any Award.
12. Effective Date and Term of Plan. The Plan shall become effective upon
-------------------------------
the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan.
------------------------------------------------
(a) The Board may at any time amend, suspend or terminate the Plan. To
the extent necessary to comply with Applicable Laws, the Company shall obtain
shareholder approval of any Plan amendment in such a manner and to such a degree
as required.
(b) No Award may be granted during any suspension of the Plan or after
termination of the Plan.
(c) Any amendment, suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted, and such Awards shall remain in full force and effect as if the Plan
had not been amended, suspended or terminated, unless mutually agreed otherwise
between the Grantee and the Administrator, which agreement must be in writing
and signed by the Grantee and the Company.
14. Reservation of Shares.
---------------------
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
12 OF 13
<PAGE>
15. No Effect on Terms of Employment/Consulting Relationship. The Plan
--------------------------------------------------------
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause, and with or without notice.
16. No Effect on Retirement and Other Benefit Plans. Except as specifically
-----------------------------------------------
provided in a retirement or other benefit plan of the Company or a Related
Entity, Awards shall not be deemed compensation for purposes of computing
benefits or contributions under any retirement plan of the Company or a Related
Entity, and shall not affect any benefits under any other benefit plan of any
kind or any benefit plan subsequently instituted under which the availability or
amount of benefits is related to level of compensation. The Plan is not a
"Retirement Plan" or "Welfare Plan" under the Employee Retirement Income
Security Act of 1974, as amended.
17. Shareholder Approval. Continuance of the Plan shall be subject to
--------------------
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under Applicable Laws. Any Award exercised
before shareholder approval is obtained shall be rescinded if shareholder
approval is not obtained within the time prescribed, and Shares issued on the
exercise of any such Award shall not be counted in determining whether
shareholder approval is obtained.
18. Information to Grantees. The Company shall provide to each Grantee,
-----------------------
during the period for which such Grantee has one or more Awards outstanding,
copies of financial statements at least annually.
[THE REMAINDER OF THE PAGE IS INTENTIONALLY OMITTED]
----------------------------------------------------
13 OF 13
<PAGE>
DESKTALK SYSTEMS, INC. 2000 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
----------------------------
Grantee's Name and Address: _____________________________________________
_____________________________________________
_____________________________________________
You have been granted an option to purchase shares of Common Stock, subject
to the terms and conditions of this Notice of Stock Option Award (the "Notice"),
the DeskTalk Systems, Inc. 2000 Stock Incentive Plan, as amended from time to
time (the "Plan") and the Stock Option Award Agreement (the "Option Agreement")
attached hereto, as follows. Unless otherwise defined herein, the terms defined
in the Plan shall have the same defined meanings in this Notice.
Award Number ________________________________________
Date of Award ________________________________________
Vesting Commencement Date ________________________________________
Exercise Price per Share $_______________________________________
Total Number of Shares Subject
to the Option (the "Shares") ________________________________________
Total Exercise Price $_______________________________________
Type of Option: __________ Incentive Stock Option
__________ Non-Qualified Stock Option
Expiration Date: ________________________________________
Post-Termination Exercise Period: Thirty (30) days commencing on the
date of termination of the Grantee's Continuous Service, or such longer
period as may be applicable upon death or Disability.
Vesting Schedule:
----------------
Subject to Grantee's Continuous Service and other limitations set forth
in this Notice, the Plan and the Option Agreement, the Option may be exercised,
in whole or in part, in accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest on each monthly anniversary of the Vesting Commencement Date thereafter.
1
<PAGE>
During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence exceeds a
period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.
DeskTalk Systems, Inc.,
a California corporation
By:_____________________________________
Title: _________________________________
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
GRANTEE'S STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 19 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.
Dated: ______________________ Signed: ________________________________
Grantee
2
<PAGE>
Award Number: ___________
DESKTALK SYSTEMS, INC. 2000 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
----------------------------
1. Grant of Option. DeskTalk Systems, Inc., a California corporation (the
---------------
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2000
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.
2. Exercise of Option.
------------------
(a) Right to Exercise. The Option shall be exercisable during its term
-----------------
in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11(b) of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction. No partial exercise of the Option may be for less than the lesser
of five percent (5%) of the total number of Shares subject to the Option or the
remaining number of Shares subject to the Option. In no event shall the Company
issue fractional Shares.
(b) Method of Exercise. The Option shall be exercisable only by
------------------
delivery of an Exercise Notice (attached as Exhibit A) which shall state the
election to exercise the Option, the whole number of Shares in respect of which
the Option is being exercised, and such other provisions as may be required by
the Administrator. The Exercise Notice shall be signed by the Grantee and shall
be delivered in person, by certified mail, or by such other method as determined
from time to time by the Administrator to the Company accompanied by payment of
the Exercise Price. The Option shall be deemed to be exercised upon receipt by
the Company of such written notice accompanied by the Exercise Price, which, to
the extent selected, shall be
1
<PAGE>
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 4(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or other person
-----
pursuant to the exercise of the Option until the Grantee or other person has
made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax, employment tax, and social security tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of the Option, the Company or the
Grantee's employer may offset or withhold (from any amount owed by the Company
or the Grantee's employer to the Grantee) or collect from the Grantee or other
person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.
3. Grantee's Representations. The Grantee understands that neither the
-------------------------
Option nor the Shares exercisable pursuant to the Option have been registered
under the Securities Act of 1933, as amended or any United States securities
laws. In the event the Shares purchasable pursuant to the exercise of the Option
have not been registered under the Securities Act of 1933, as amended, at the
time the Option is exercised, the Grantee shall, if requested by the Company,
concurrently with the exercise of all or any portion of the Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.
4. Method of Payment. Payment of the Exercise Price shall be made by any
-----------------
of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law and, provided further, that the portion of the Exercise Price
equal to the par value of the Shares must be paid in cash or other legal
consideration permitted by the Delaware General Corporation Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date, surrender
of Shares or delivery of a properly executed form of attestation of ownership of
Shares as the Administrator may require (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a Fair Market
Value on the date of surrender or attestation equal to the aggregate Exercise
Price of the Shares as to which the Option is being exercised (but only to the
extent that such exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price);
or
(d) if the exercise occurs on or after the Registration Date, payment
through a broker-dealer sale and remittance procedure pursuant to which the
Grantee (i) shall provide written instructions to a Company designated brokerage
firm to effect the immediate sale of some or all of the purchased Shares and
remit to the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
Shares and (ii) shall provide written directives to the Company to deliver the
2
<PAGE>
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction.
5. Restrictions on Exercise. The Option may not be exercised if the
------------------------
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.
6. Termination or Change of Continuous Service. In the event the Grantee's
-------------------------------------------
Continuous Service terminates the Grantee may, to the extent otherwise so
entitled at the date of such termination (the "Termination Date"), exercise the
Option during the Post-Termination Exercise Period. In no event shall the Option
be exercised later than the Expiration Date set forth in the Notice. In the
event of the Grantee's change in status from Employee, Director or Consultant to
any other status of Employee, Director or Consultant, the Option shall remain in
effect and, except to the extent otherwise determined by the Administrator,
continue to vest; provided, however, with respect to any Incentive Stock Option
that shall remain in effect after a change in status from Employee to Director
or Consultant, such Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day three (3) months and one (1) day following such change in status. Except
as provided in Sections 7 and 8 below, to the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option within the Post-Termination Exercise Period, the Option
shall terminate.
7. Disability of Grantee. In the event the Grantee's Continuous Service
---------------------
terminates as a result of his or her Disability, the Grantee may, but only
within three (3) months from the Termination Date (and in no event later than
the Expiration Date), exercise the Option to the extent he or she was otherwise
entitled to exercise it on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.
8. Death of Grantee. In the event of the termination of the Grantee's
----------------
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the six
(6) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the date
of termination, within six (6) months from the date of death (but in no event
later than the Expiration Date). To the extent that the Grantee is not entitled
to exercise the Option on the date of death, or if the Option is not exercised
to the extent so entitled within the time specified herein, the Option shall
terminate.
3
<PAGE>
9. Transferability of Option. The Option, if an Incentive Stock Option,
--------------------------
may not be transferred in any manner other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of the Grantee
only by the Grantee. The Option, if a Non-Qualified Stock Option may be
transferred by will, by the laws of descent and distribution, and to the extent
and in the manner authorized by the Administrator, to members of the Grantee's
immediate family (as determined by the Administrator) or pursuant to a domestic
relations order. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
10. Term of Option. The Option may be exercised no later than the
--------------
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.
11. Company's Right of First Refusal.
--------------------------------
(a) Transfer Notice. Neither the Grantee nor a transferee (either being
---------------
sometimes referred to herein as the "Holder") shall sell, hypothecate, encumber
or otherwise transfer any Shares or any right or interest therein without first
complying with the provisions of this Section 11 or obtaining the prior written
consent of the Company. In the event the Holder desires to accept a bona fide
third-party offer for any or all of the Shares, the Holder shall provide the
Company with written notice (the "Transfer Notice") of:
(i) The Holder's intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
(b) First Refusal Exercise Notice. The Company shall have the right to
-----------------------------
purchase (the "Right of First Refusal") all but not less than all, of the Shares
which are described in the Transfer Notice (the "Offered Shares") at any time
during the period commencing upon receipt of the Transfer Notice and ending
forty-five (45) days after the first date on which the Company determines that
the Right of First Refusal may be exercised without incurring an accounting
expense with respect to such exercise (the "Option Period") at the per share
price or value and in accordance with the terms stated in the Transfer Notice,
which Right of First Refusal shall be exercised by written notice (the "First
Refusal Exercise Notice") to the Holder. During the Option Period and the
120-day period following the expiration of the Option Period, the Company also
may exercise its Repurchase Right in lieu or in addition to its Right of First
Refusal if the Repurchase Right is or becomes exercisable during the Option
Period or such 120-day period.
(c) Payment Terms. The Company shall consummate the purchase of the
-------------
Offered Shares on the terms set forth in the Transfer Notice within 15 days
after delivery of the First Refusal Exercise Notice; provided, however, that in
the event the Transfer Notice provides for the payment for the Offered Shares
other than in cash, the Company and/or its assigns shall
4
<PAGE>
have the right to pay for the Offered Shares by the discounted cash equivalent
of the consideration described in the Transfer Notice as reasonably determined
by the Administrator. Upon payment for the Offered Shares to the Holder or into
escrow for the benefit of the Holder, the Company or its assigns shall become
the legal and beneficial owner of the Offered Shares and all rights and interest
therein or related thereto, and the Company shall have the right to transfer the
Offered Shares to its own name or its assigns without further action by the
Holder.
(d) Assignment. Whenever the Company shall have the right to purchase
----------
Shares under this Right of First Refusal, the Company may designate and assign
one or more employees, officers, directors or shareholders of the Company or
other persons or organizations, to exercise all or a part of the Company's Right
of First Refusal.
(e) Non-Exercise. If the Company and/or its assigns do not collectively
------------
elect to exercise the Right of First Refusal within the Option Period or such
earlier time if the Company and/or its assigns notifies the Holder that it will
not exercise the Right of First Refusal, then the Holder may transfer the Shares
upon the terms and conditions stated in the Transfer Notice, provided that:
(i) The transfer is made within 120 days of the expiration of
the Option Period; and
(ii) The transferee agrees in writing that such Shares shall be
held subject to the provisions of this Option Agreement.
(f) Expiration of Transfer Period. Following such 120-day period, no
-----------------------------
transfer of the Offered Shares and no change in the terms of the transfer as
stated in the Transfer Notice (including the name of the proposed transferee)
shall be permitted without a new written Transfer Notice prepared and submitted
in accordance with the requirements of this Right of First Refusal.
(g) Exception for Certain Family Transfers. Anything to the contrary
--------------------------------------
contained in this section notwithstanding, the transfer of any or all of the
Shares during the Grantee's lifetime or on the Grantee's death by will or
intestacy to the Grantee's Immediate Family or a trust for the benefit of the
Grantee or the Grantee's Immediate Family shall be exempt from the provisions of
this Right of First Refusal (a "Permitted Transfer"); provided, however, that
(i) the transferee or other recipient shall receive and hold the Shares so
transferred subject to the provisions of this Option Agreement, and there shall
be no further transfer of such Shares except in accordance with the terms of
this Option Agreement and (ii) prior to any such transfer, each transferee shall
execute an agreement pursuant to which such transferee shall agree to receive
and hold such Shares subject to the provisions of this Option Agreement.
"Immediate Family" as used herein shall mean spouse, domestic partner (as
determined by the Administrator), child, lineal descendant or antecedent,
father, mother, brother or sister and the lineal descendants of such
individuals.
(h) Termination of Right of First Refusal. The provisions of this
-------------------------------------
Right of First Refusal shall terminate as to all Shares upon the Registration
Date.
5
<PAGE>
(i) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
transaction described in Section 11 of the Plan, any new, substituted or
additional securities or other property which is by reason of any such
transaction distributed with respect to the Shares shall be immediately subject
to the Right of First Refusal, but only to the extent the Shares are at the time
covered by such right.
(j) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Right of First Refusal shall automatically lapse in
its entirety, except to the extent this Option Agreement is assumed by the
successor corporation (or its Parent) in connection with such Corporate
Transaction, in which case the Right of First Refusal shall apply to the new
capital stock or other property received in exchange for the Shares in
consummation of the Corporate Transaction, but only to the extent the Shares are
at the time covered by such right.
12. Company's Repurchase Right.
--------------------------
(a) Grant of Repurchase Right. The Company is hereby granted the right
-------------------------
(the "Repurchase Right"), exercisable at any time (i) during the ninety (90) day
period following the Termination Date, or (ii) during the ninety (90) day period
following an exercise of the Option that occurs after the Termination Date to
repurchase all or any portion of the Shares (the "Share Repurchase Period").
(b) Exercise of the Repurchase Right. The Repurchase Right shall be
--------------------------------
exercisable by written notice delivered to each Holder of the Shares prior to
the expiration of the Share Repurchase Period. The notice shall indicate the
number of Shares to be repurchased and the date on which the repurchase is to be
effected, such date to be not later than the last day of the Share Repurchase
Period. On the date on which the repurchase is to be effected, the Company
and/or its assigns shall pay to the Holder in cash or cash equivalents
(including the cancellation of any purchase-money indebtedness) an amount equal
to the Fair Market Value on the date immediately prior to the day on which the
repurchase is to be effected, of the Shares which are to be repurchased from the
Holder. Upon such payment or deposit into escrow for the benefit of the Holder,
the Company and/or its assigns shall become the legal and beneficial owner of
the Shares being repurchased and all rights and interest thereon or related
thereto, and the Company shall have the right to transfer to its own name or its
assigns the number of Shares being repurchased, without further action by the
Holder.
(c) Assignment. Whenever the Company shall have the right to purchase
----------
Shares under this Repurchase Right, the Company may designate and assign one or
more employees, officers, directors or shareholders of the Company or other
persons or organizations, to exercise all or a part of the Company's Repurchase
Right.
(d) Termination of the Repurchase Right. The Repurchase Right shall
-----------------------------------
terminate with respect to any Shares for which it is not timely exercised. In
addition, the Repurchase Right shall terminate and cease to be exercisable with
respect to all Shares upon the Registration Date.
6
<PAGE>
(e) Additional Shares or Substituted Securities. In the event of any
-------------------------------------------
transaction described in Section 11 of the Plan, any new, substituted or
additional securities or other property which is by reason of any such
transaction distributed with respect to the Shares shall be immediately subject
to the Repurchase Right, but only to the extent the Shares are at the time
covered by such right. Appropriate adjustments to reflect the distribution of
such securities or property shall be made to the price per share to be paid upon
the exercise of the Repurchase Right in order to reflect the effect of any such
transaction upon the Company's capital structure.
(f) Corporate Transaction. Immediately prior to the consummation of a
---------------------
Corporate Transaction, the Repurchase Right to the extent it has not been
exercised shall automatically lapse in its entirety ,except to the extent this
Option Agreement is assumed by the successor corporation (or its Parent) in
connection with such Corporate Transaction, in which case the Repurchase Right
shall apply to the new capital stock or other property received in exchange for
the Shares in consummation of the Corporate Transaction, but only to the extent
the Shares are at the time covered by such right. Appropriate adjustments shall
be made to the price per share payable upon exercise of the Repurchase Right to
reflect the effect of the Corporate Transaction upon the Company's capital
structure.
13. Stop-Transfer Notices. In order to ensure compliance with the
---------------------
restrictions on transfer set forth in this Option Agreement, the Notice or the
Plan, the Company may issue appropriate "stop transfer" instructions to its
transfer agent, if any, and, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
14. Refusal to Transfer. The Company shall not be required (i) to transfer
-------------------
on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
15. Tax Consequences. Set forth below is a brief summary as of the date of
----------------
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option qualifies as an
----------------------------------
Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.
(b) Exercise of Incentive Stock Option Following Disability. If the
-------------------------------------------------------
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the
7
<PAGE>
Grantee must exercise an Incentive Stock Option within three (3) months of such
termination for the Incentive Stock Option to be qualified as an Incentive Stock
Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a
--------------------------------------
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock
---------------------
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
16. Lock-Up Agreement.
-----------------
(a) Agreement. The Grantee, if requested by the Company and the lead
---------
underwriter of any public offering of the Common Stock or other securities of
the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock or any securities convertible into or
exchangeable or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public offering or acquired
on the public market after such offering) during the 180-day period following
the effective date of a registration statement of the Company filed under the
Securities Act of 1933, as amended, or such shorter period of time as the Lead
Underwriter shall specify. The Grantee further agrees to sign such documents as
may be requested by the Lead Underwriter to effect the foregoing and agrees that
the Company may impose stop-transfer instructions with respect to such Common
Stock subject until the end of such period. The Company and the Grantee
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 16.
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(b) No Amendment Without Consent of Underwriter. During the period from
-------------------------------------------
identification as a Lead Underwriter in connection with any public offering of
the Company's Common Stock until the earlier of (i) the expiration of the
lock-up period specified in Section 16(a) in connection with such offering or
(ii) the abandonment of such offering by the Company and the Lead Underwriter,
the provisions of this Section 16 may not be amended or waived except with the
consent of the Lead Underwriter.
17. Entire Agreement: Governing Law. The Notice, the Plan and this Option
-------------------------------
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 1646.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.
18. Headings. The captions used in the Notice and this Option Agreement are
--------
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
19. Dispute Resolution. The provisions of this Section 19 shall be the
------------------
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice, the Plan and this Option Agreement by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice, the Plan or this Option
Agreement shall be brought in the United States District Court for the Southern
District of California (or should such court lack jurisdiction to hear such
action, suit or proceeding, in a California state court in the County of Los
Angeles) and that the parties shall submit to the jurisdiction of such court.
The parties irrevocably waive, to the fullest extent permitted by law, any
objection the party may have to the laying of venue for any such suit, action or
proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT
THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If
any one or more provisions of this Section
9
<PAGE>
19 shall for any reason be held invalid or unenforceable, it is the specific
intent of the parties that such provisions shall be modified to the minimum
extent necessary to make it or its application valid and enforceable.
20. Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
beneath its signature in the Notice, or to such other address as such party may
designate in writing from time to time to the other party.
21. Confidentiality. The Company shall provide to Grantee, during the
---------------
period for which Grantee has one or more Awards outstanding, copies of financial
statements of the Company at least annually. Grantee understands and agrees that
such financial statements are confidential and shall not be disclosed by
Grantee, to any entity or person, for any reason, at any time, without the prior
written consent of the Company, unless required by law. If disclosure of such
financial statements is required by law, whether through subpoena, request for
production, deposition, or otherwise, Grantee promptly shall provide written
notice to Company, including copies of the subpoena, request for production,
deposition, or otherwise, within five (5) business days of their receipt by
Grantee and prior to any disclosure so as to provide Company an opportunity to
move to quash or otherwise to oppose the disclosure. Notwithstanding the
foregoing, Grantee may disclose the terms of such financial statements to his or
her spouse or domestic partner, and for legitimate business reasons, to legal,
financial, and tax advisors.
10
<PAGE>
EXHIBIT A
DESKTALK SYSTEMS, INC. 2000 STOCK INCENTIVE PLAN
EXERCISE NOTICE
---------------
DESKTALK SYSTEMS, INC.
19191 S. VERMONT AVE., 9TH FLOOR
TORRANCE, CA 90502
Attention: Secretary
1. Effective as of today, ______________, ___ the undersigned (the
"Grantee") hereby elects to exercise the Grantee's option to purchase
___________ shares of the Common Stock (the "Shares") of ________________, Inc.
(the "Company") under and pursuant to the Company's 2000 Stock Incentive Plan,
as amended from time to time (the "Plan") and the [ ] Incentive [ ]
Non-Qualified Stock Option Award Agreement (the "Option Agreement") and Notice
of Stock Option Award (the "Notice") dated ______________, ________. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Exercise Notice.
2. Representations of the Grantee. The Grantee acknowledges that the
------------------------------
Grantee has received, read and understood the Notice, the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing such
---------------------
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11(a) of the Plan.
The Grantee shall enjoy rights as a shareholder until such time as the
Grantee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal, or the Repurchase Right. Upon such exercise, the
Grantee shall have no further rights as a holder of the Shares so purchased
except the right to receive payment for the Shares so purchased in accordance
with the provisions of the Option Agreement, and the Grantee shall forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.
4. Delivery of Payment. The Grantee herewith delivers to the Company the
-------------------
full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 4(d) of the Option Agreement.
1
<PAGE>
5. Tax Consultation. The Grantee understands that the Grantee may suffer
----------------
adverse tax consequences as a result of the Grantee's purchase or disposition of
the Shares. The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.
6. Taxes. The Grantee agrees to satisfy all applicable federal, state and
-----
local income and employment tax withholding obligations and herewith delivers to
the Company the full amount of such obligations or has made arrangements
acceptable to the Company to satisfy such obligations. In the case of an
Incentive Stock Option, the Grantee also agrees, as partial consideration for
the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Award Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of
such an early disposition, the Grantee agrees to satisfy the amount of such
withholding in a manner that the Administrator prescribes.
7. Restrictive Legends. The Grantee understands and agrees that the
-------------------
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the Company
or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A REPURCHASE
RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES,
A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER.
SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL AND REPURCHASE
RIGHT ARE BINDING ON TRANSFEREES OF THESE SHARES.
2
<PAGE>
8. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon the Grantee and his or her heirs, executors, administrators,
successors and assigns.
9. Headings. The captions used in this Exercise Notice are inserted for
--------
convenience and shall not be deemed a part of this agreement for construction or
interpretation.
10. Dispute Resolution. The provisions of Section 20 of the Option
------------------
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.
11. Governing Law; Severability. This Exercise Notice is to be construed in
---------------------------
accordance with and governed by the internal laws of the State of California (as
permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should
any provision of this Exercise Notice be determined by a court of law to be
illegal or unenforceable, such provision shall be enforced to the fullest extent
allowed by law and the other provisions shall nevertheless remain effective and
shall remain enforceable.
12. Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice), with
postage and fees prepaid, addressed to the other party at its address as shown
below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.
13. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
14. Entire Agreement. The Notice, the Plan and the Option Agreement are
----------------
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.
3
<PAGE>
Submitted by: Accepted by:
GRANTEE: DESKTALK SYSTEMS, INC.
By:____________________________________
____________________________________ Title:_________________________________
(Signature)
Address: Address:
------- -------
____________________________________ 19191 S. Vermont Avenue, 9th Floor
____________________________________ Torrance, CA 90502
4
<PAGE>
EXHIBIT B
DESKTALK SYSTEMS, INC. 2000 STOCK INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
-----------------------------------
GRANTEE: _____________________________________________
COMPANY: _____________________________________________
SECURITY: COMMON STOCK
AMOUNT: _____________________________________________
DATE: _____________________________________________
In connection with the purchase of the above-listed Securities, the undersigned
Grantee represents to the Company the following:
(a) Grantee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Grantee is
acquiring these Securities for investment for Grantee's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Grantee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon among other things, the bona fide nature of Grantee's
investment intent as expressed herein. Grantee further understands that the
Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Grantee further acknowledges and understands that the Company is under no
obligation to register the Securities. Grantee understands that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-public offering subject to the satisfaction of certain
conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the
time of the grant of the Option to the Grantee, the exercise will be exempt from
registration under the Securities Act. In the event the Company becomes subject
to the reporting requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, ninety (90) days thereafter (or such longer period as any market
stand-off agreement may require) the Securities exempt under Rule 701 may be
resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the
1
<PAGE>
availability of certain public information about the Company, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.
In the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than one year after the later of the date the Securities were
sold by the Company or the date the Securities were sold by an affiliate of the
Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the
Securities less than two years, the satisfaction of the conditions set forth in
sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Grantee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Grantee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(e) Grantee represents that he is a resident of the state of
____________________.
Signature of Grantee:
_____________________________________
Date: ________________________ , ____
2
